A group of Chrysler's secured lenders is seeking to block its plan to sell its business at auction this month, arguing that the U.S. government is violating federal law in a bid to preserve the automaker, which just filed for bankruptcy protection.

The group, calling itself Chrysler's non-Tarp lenders, seeks to block the proposed sale of Chrysler to an alliance led by the Italian automaker Fiat SpA; it also seeks to block Chrysler's request for approval of a $4.5 billion Treasury Department loan to finance the reorganization. The group said secured lenders that agreed to the Fiat deal, such as JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc., were conflicted because they had accepted funds through the Treasury's Troubled Asset Relief Program.

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